When you buy or sell a property in India, TDS (Tax Deducted at Source) is applicable under Section 194-IA of the Income Tax Act if the sale consideration exceeds ₹50 lakhs. The buyer is responsible for deducting the TDS, depositing it with the government, and filing Form 26QB to report the payment. While the process of filing Form 26QB is fairly straightforward for transactions involving a single buyer and single seller, the process becomes a bit more complex when dealing with multiple buyers and multiple sellers.
In this blog, we will walk you through the process of filing Form 26QB for both types of transactions, along with examples for a better understanding.
What is Form 26QB?
Form 26QB is a challan-cum-statement that a buyer must submit to report the TDS on the sale of property. It contains the details of the transaction, such as the buyer’s and seller’s information, the amount of TDS deducted, and the payment details. The buyer is required to file this form within 30 days from the end of the month in which the TDS is deducted.
Once Form 26QB is filed, the buyer receives a TDS certificate (Form 16B), which needs to be provided to the seller as proof of the TDS payment.
1. Filing Form 26QB for Single Buyer-Single Seller
For a single buyer and single seller transaction, the process is quite simple and involves the following steps:
Steps to File Form 26QB:
- Login to the Income Tax e-Filing Portal: Visit the Income Tax e-filing portal and log in with your credentials (PAN number and password).
- Navigate to the TDS Section: Go to the e-File section and select “Submit TDS on Property” under the “TDS / TCS” option.
- Fill the Details in Form 26QB: You will need to fill in the following details:
- Buyer’s and Seller’s Information: PAN, name, address, and contact details.
- Property Details: Property address and sale consideration.
- TDS Amount: 1% of the sale consideration.
- Mode of Payment: You will also need to choose the mode of payment (online or offline).
- Make the Payment: After submitting the form, you will be directed to make the payment for the TDS amount (1% of the sale consideration). You can pay the TDS via net banking or challan payment (if you prefer offline payment).
- Download Form 26QB: After making the payment, you will be able to download the filed Form 26QB, which will contain a unique Challan Identification Number (CIN).
- Issue TDS Certificate (Form 16B): After filing the form, the buyer should generate Form 16B from the Income Tax portal and provide it to the seller as proof of TDS deduction.
Example:
- Property sold by Seller A: ₹80,00,000
- Buyer: Mr. X
- TDS Amount: 1% of ₹80,00,000 = ₹80,000
- Payment Date: 25th January 2024
In this case, Mr. X will file Form 26QB, pay ₹80,000 as TDS, and generate Form 16B for Seller A. The TDS payment must be deposited with the government within 30 days from the end of January.
2. Filing Form 26QB for Multiple Buyers-Multiple Sellers
When the property transaction involves multiple buyers or multiple sellers, the process becomes slightly more complex. Each buyer is responsible for deducting TDS on their share of the property value and filing separate Form 26QB.
Steps to File Form 26QB for Multiple Buyers and Sellers:
- Login to the Income Tax e-Filing Portal: Just like in the single buyer scenario, the buyer will need to log in to the Income Tax e-filing portal.
- Fill the Details in Form 26QB: For each buyer and seller, a separate Form 26QB is required. This form will include the following details:
- Buyer’s Information: PAN, name, address, contact details.
- Seller’s Information: PAN, name, address, contact details.
- Property Details: Property address and sale consideration.
- TDS Amount: 1% of the portion of sale consideration paid by each buyer.
- Make the Payment: Each buyer needs to pay TDS based on their share of the property consideration. The TDS payment should be made separately by each buyer.
- Download Form 26QB and Issue TDS Certificates (Form 16B): After payment, each buyer will receive their Form 26QB and Form 16B. The buyer should provide Form 16B to the respective seller.
- Repeat the Process for Each Buyer: If there are multiple buyers, each buyer will need to file a separate Form 26QB, paying TDS on their share of the sale consideration.
Example:
Let’s say a property is sold for ₹1.2 crore (₹1,20,00,000) with two buyers and two sellers.
- Buyer 1 (Mr. A) buys 50% of the property for ₹60,00,000
- Buyer 2 (Mr. B) buys 50% of the property for ₹60,00,000
- Seller 1 (Mr. X) and Seller 2 (Mr. Y) each sell 50% of the property.
Step-by-Step Process:
- Buyer 1 (Mr. A):
TDS = 1% of ₹60,00,000 = ₹60,000
Mr. A files Form 26QB and makes the payment of ₹60,000.
Mr. A will generate Form 16B and provide it to Seller 1 (Mr. X). - Buyer 2 (Mr. B):
TDS = 1% of ₹60,00,000 = ₹60,000
Mr. B files Form 26QB and makes the payment of ₹60,000.
Mr. B will generate Form 16B and provide it to Seller 2 (Mr. Y).
In this case, both buyers need to file separate forms (Form 26QB) and pay TDS based on their respective share of the property consideration.
3. Important Considerations
- TDS on Non-Residents:
If the seller is a non-resident, the TDS rate increases to 20% (rather than 1%). In this case, the buyer needs to deduct the higher rate and file Form 26QB accordingly. - Payment Deadline:
The buyer must file Form 26QB and pay the TDS within 30 days from the end of the month in which the payment is made. For example, if the payment is made in January, Form 26QB must be filed by February 28. - Penalty for Non-Compliance:
If TDS is not deducted or filed correctly, the buyer may face penalties and interest charges. Make sure all details are accurate and payments are made on time.
Conclusion
Filing Form 26QB is an essential step for buyers when purchasing property in India, as it ensures compliance with TDS regulations. The process is straightforward when dealing with a single buyer and single seller but requires additional effort when there are multiple buyers or sellers. Each buyer needs to file a separate Form 26QB for their share of the property and pay the corresponding TDS.
By following the steps outlined above, buyers and sellers can ensure smooth and efficient TDS compliance during property transactions. Always consult a tax professional if you encounter any complications or have doubts regarding the filing process.
